If your organisation hasn’t been required to be audited before, you may be wondering whether there are any advantages to an audit, apart from meeting your legal obligation.
The good news is that there are many benefits to being audited, and many businesses not required to, still choose to have one because of the insights they deliver.
Business benefits of an audit
Having an audit provides assurance that your financial statements are correct, and this will have many positive consequences for other aspect of your business:
Ensures you meet financial obligations: Having an audit may be a legal requirement for some businesses, but an audit can ensure that you are meeting other financial obligations and helps you to make changes where this isn’t the case. Audits are also an opportunity for businesses to be made aware of future changes in the law in areas such as taxation and accounting to help them to prepare for the changes.
Provides a risk assessment: The thorough process of an audit shines a light on any weaknesses in your accounting processes or inaccuracies in your figures. It will also assess your internal control systems. The output from an assessment enables auditors to give feedback and make suggestions for improvements. Their insights and the fresh perspective they are able to bring to the audit can help businesses to address areas of inefficiencies and drive improvement in a wide range of accounting and business activities.
Builds investor confidence: Investors will often look to audited accounts as an important part of their due diligence process if they are considering investing in, or donating to, your organisation. Businesses with an audited financial statement are more likely to be able to secure investors and increase investments and negotiate better terms.
Lenders value audits: Many lenders will require businesses to have audited financial statements as part of the loan application process and won’t approve a loan without this information.
Helps to grow a business: Knowing that a business is thorough in how if conducts its affairs provides assurance for all stakeholders. When a business is run diligently it attracts partner businesses without fear of any malpractice or oversight, encouraging collaboration and boosting trade.
Improves management decisions: Financial information is critically important for informing business decisions. To ensure that you make the right decisions, you need accurate, up-to-date information to base them on. Audits offer confidence that is the case and also help to develop your financial processes to improve decision-making further.
The elements of a good audit
Professionalism, Integrity, analytical and problem-solving are some of the qualities you would expect from your auditor, but you should also expect them to conduct themselves in a particular way to ensure the audit is thorough, causes minimal disruption and delivers accurate results.
To get the most from a financial statement audit you need to engage with the auditing team. A good auditor will take the time to get to know your business, will be a good listener and will have a good knowledge and experience of the business sector within which you work, so that they can provide informed advice that is relevant to your sector and your operations.
Working with the same core team of auditors that is consistent and which returns regularly to your business is also important so that there is no need to educate a new auditor about your business each year.
Planning for an audit is essential and should also be tailored to your needs and work to a schedule that is suitable for your organisation and your team. Regular contact with the auditor plays a key part in good preparation, as is working with auditors who are proactive and engaged, so any problems can be flagged up in advance. The right level of engagement will also ensure that you are comfortable with the auditors when they are on site.
Finding an auditor you can work with
If your business has not had a financial statement audit before, or you feel that now is the right time to change auditors, it can seem difficult to know where to start. But finding a qualified auditing practice that you are happy to work together with, who you can trust and who shares your values is a good place to start.
At Parker Russell our desire is to build the foundations of self-assurance that a business needs to grow sustainably and ethically through an honest, fair and transparent auditing process.
We provide assurance and advice on best practices and potential dangers and help to manage risk. We also collate and assure the metrics needed to demonstrate legal and financial compliance.
If you would like an obligation-free discussion about how much more you can gain from one of our audits and learn more about how Parker Russell supports many other businesses, contact us, today.